The annual poll, produced in partnership with Barclaycard, pinpoints the opportunities and challenges facing pubs, bars and restaurants over the next 12 months.
The survey collated responses from 195 individuals working at CEO, MD, chairperson, director, or other senior management level in the sector, and reveals the impact of rising costs, over-supply and Brexit.
It shows that operators have entered 2018 off the back of a difficult 12 months. For the first time in the survey’s history, more leaders reported that their performance had been below expectations (33%) over the past six months than above expectations (26%).
Only a third of leaders (34%) say they are now optimistic about the eating and drinking-out market over the next 12 months.
Cause for general concern
According to CGA, the dip comes as a result of a broad range of challenges.
The survey identifies business rates as the leading cause of concern in 2018, followed by the implementation of the national living wage, rising food costs and market saturation.
After a string of news stories about casual-dining restaurant closures, and with CGA’s outlet index measuring 4,000 more restaurants than in 2013, there is widespread concern that supply is outstripping demand.
These difficulties are being exacerbated by Brexit, according to the poll, with two thirds of respondents (67%) saying their business has been negatively affected by the vote to leave the European Union, with the potential impact in staff availability cause for concern – especially in London.
This combination is leading many brands to scale back their new openings in 2018, with the majority of leaders (60%) predicting fewer new entrants to the market with 90% expecting to see more business failures in 2018 than in 2017.
Wet-led business optimistic
However, despite adverse trading conditions, leaders remain upbeat.
Almost two thirds (64%) say they are optimistic for their company's prospects – only slightly less than the 68% who said the same at the start of 2017. Only 9% are pessimistic about the year ahead.
The CGA’s findings identify optimism among drinks-led operators in particular.
Nearly half of respondents (43%) were optimistic about the general market over the next 12 months, compared to fewer than a third (30%) of food-led firm leaders.
With evidence of a more sustainable level of supply in drinks-led venues, and the Coffer Peach Business Tracker identifying faster growth for pubs and bars than restaurants in 2017, this part of the market is mooted for a better 2018 than restaurants.
'Complex and fascinating'
CGA chief executive Phil Tate said: “Our Business Leaders’ Survey paints a complex and fascinating picture of prospects for British pubs, bars and restaurants in 2018.
“With property, people and food costs rising and the twin threats of saturation and Brexit looming large, brands face something of a perfect storm of challenges this year.
“But this is a very resilient industry and our poll shows there are bright spots and opportunities for growth in the market too.
“People will continue to enjoy eating and drinking out in 2018, and operators that can best understand and deliver the experiences that consumers crave will be the winners in an ultra-competitive market.”